Chip Sales End 2009 Higher Despite Price Drop

Worldwide PC microprocessor shipments rebounded enough in the second half of 2009 to erase the first half's losses and push the annual figure into positive growth, reflecting a remarkable turnaround given the plunge of late 2008.

That's the conclusion of industry researcher IDC, which found that worldwide microprocessor sales rose 31.3 percent in the fourth quarter of 2009 over the same period a year earlier -- a steep jump due in part to the fact that Q4 2008 was the start of the collapse.

But growth is growth and the industry's year-end performance helped it exit 2009 with a 2.5 percent improvement over 2008.

Due to downward price pressure, however, vendors racked up a total of $28.6 billion in sales for 2009, with average selling prices (ASPs) having fallen 7.1 percent.

Considering that IDC didn't think chip sales would surpass 2008 levels until 2012, it's still quite a recovery.

Growth came across the board. Mobile PC processors, which include Intel's Atom CPUs for netbooks, increased 11.7 percent year-over-year in Q4. x86 server processors grew 14.1 percent from the previous year, while desktop processor sales, which have usually been trending down, grew a modest 4.8 percent over the third quarter.

All of the vendors involved -- notably Intel (NASDAQ: INTC) and AMD (NYSE: AMD) -- plowed through the spending downturn with new products. Those product sales took off in Q3 as system vendors prepared for back-to-school sales, Christmas sales, and the release of Windows 7.

"The sequential rise in mainstream and high-end client processors points to the new products, like Core i5 and Athlon II, that Intel and AMD were shipping into the market for the holiday buying season in the fourth quarter," said Shane Rau, director of semiconductor personal computing research at IDC.

"What's interesting there is that consumers were there to buy systems based on them and that OEMs were investing in them for future builds. At the same time, the sequential rise in server processors indicates that server OEMs are starting to see corporations come off the sidelines," Rau added.

AMD Gains Some Ground on Intel

In the fourth quarter, Intel's market position slipped 0.6 percentage point to 80.5 percent, while AMD gained 0.7 percentage point to push it up to 19.4 percent total market share. For the year, Intel held 79.7 percent unit market share, a loss of 0.7 percentage point, while AMD inched back over the 20 percent mark to grab 20.1 percent, a gain of 0.8 point.

Intel held 86.8 percent of the mobile chip market share in 2009, down from 87.1 percent in 2008, while AMD gained slightly, from 12.1 percent to 12.8 percent. In the desktop market, AMD made a nice gain, from 26.4 percent in 2008 to 28.8 percent in 2009. Intel dipped from 73.4 percent to 71.0 percent.

The server business was not so kind to AMD -- the company's share fell from 13.4 percent in 2008 to 10.1 percent in 2009. Intel grew from 86.6 percent in 2008 to 89.9 percent in 2009. Intel and AMD have both given optimistic guidance in their recent quarterly earnings calls.

Meanwhile, for the industry at large, IDC projects that chip sales will rise 15.1 percent in 2010 over 2009 levels.

"We're looking forward to the end of the second quarter and the second half of the year as corporations qualify new client and server platforms and open up their IT budgets further," Rau said. "Combined with healthy consumer spending, the resumption of corporation spending will lead to a healthy 2010."

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.